February's Labor Force Data - A Glimmer of Hope!

Once each month, the Bureau of Labor Statistics (BLS) releases labor force data for the previous month. If you go to www.bls.gov, you will find labor force information about unemployment and jobs. I've been writing about this jobless recovery, a recovery from the Great Recession characterized by (1) rising and/or high, stagnant unemployment rates and (2) falling number of jobs during the recession and then falling and/or very slow growth in the number of jobs druing the recovery. So, here's quick summary from the February 2011 data, but if you want more detail, look at the information at http://www.bls.gov/news.release/pdf/empsit.pdf

A Recap: The Great Recession started in December 2007. In that month, the unemployment rate was 5.0 percent. One month later, the number of nonfarm jobs peaked at 137,996,000 jobs in January 2008 before starting a long decline that ended in February 2010. The Great Recession officially ended in June 2009, and in that month, the unemployment rate was 9.5 percent.

While the recession ended in June 2009, the unemployment rate continued to rise reaching 10.1 percent in October 2009. The number of jobs continued to fall until February 2010 when nonfarm jobs were counted as 129,246,000. Therefore, the unemployment rate more than doubled and 8,750,000 nonfarm jobs were lost in the Great Recession. NOTE: These data have changed slightly from the previous monthly updates I've written due to a once-a-year benchmark revision by the Bureau of Labor Statistics.

The February 2011 Data: OK. How have we done since? The unemployment rate fell to 8.9 percent in February 2011, and there were 13.7 million persons unemployed. The number of nonfarm jobs in the February 2011 BLS report increased by 192,000 jobs to a total of 130,515,000 jobs. Therefore, in the 20 months after the Great Recession ended, we've regained only 1,269,000 of the 8,750,000 jobs lost in the downturn - only 14.9 percent recovered. That is, we are very far from just getting back to where we were at the beginning of the recession.

This is a good improvement over the data from January 2011; the progress towards regaining the lost jobs of the Great Recession picked up steam but still remains slower than we'd like so far into this recovery. Moreover, there were more than 200,000 jobs created in the private sector as state and local government employment fell in February 2011 - more good news for the private sector. The improvement in private job creation was widespread: 33,000 new manufacturinig jobs, 33,000 new construction jobs, 47,000 new jobs in the professional and business sector and 34,000 new health care jobs. Remember: the benchmark is that we need to add 100,000 jobs per month simply to keep the unemployment rate where it is, and we must have a sustained monthly increase of 300,000 and more jobs per month to significantly reduce the unemployment rate. Last month's data is a glimmer of hope.

This is how jobless recoveries work: the economy improves, but jobs don't pick up for a while. Those workers who are employed become more productive, and output increases. However, firms are reluctant to hire more workers, so employment stagnates, just as you can see happening for quite a while now. In an earlier blog, I stated that this is the third jobless recovery in a row, but it's becoming clear that this jobless recovery will be much longer than the previous ones.

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about this blog

Dr. Samuel M. Laposata teaches Economics at Muhlenberg College. He is now Visiting Professor of Economics, but many adult students remember Sam where he was Dean of the Wescoe School. Before coming to Muhlenberg in 1994, Sam was the Chief Economist for Virginia Power (now Dominion Power) in Richmond, Virginia. The goal of this blog is real simple: make sense of what’s happening in the economy.